Rather than reacting impulsively to short-term market fluctuations, institutional investors have the resources (and patience) to recognize the US market as a continued cornerstone of global diversification strategies focused on attractive long-term returns.
Across every real estate cycle, we answer questions about the drivers of capital flows, the drivers of occupier demand, or broader questions about the future of allocations to real estate within a broader investment portfolio.
In addition, the rapidly increasing news cycle has given provenance to headlines that have boldly declared the end of one trend or the beginning of another.
Suburban areas have been in favor and out, retail has been declared dead and re-born, and five years ago many believed no one would ever work in an office building again. Beneath the headlines, there are always layers to a narrative and nuances to the particular trend in question.
Since the start of 2025, trade policy and geopolitical relations have opened new conversations about the relationship between the US and rest of the world. While these conversations are often tied to policy or politics, they often do so at the exclusion of more nuanced perspectives on the trends that truly drive capital flows and investment strategies.
Ultimately, real estate investment is always driven by supply/demand dynamics, cost of capital, relative value, and the underlying macroeconomic fundamentals that will support NOI, rental growth, and exit liquidity over an investment horizon.
In answering the question of how institutional investors are rebalancing toward or away from the US, this article will attempt this nuance and provide an analysis of what drives capital flows, what current and historic capital flows tell us about real estate trends around the world, and the types of investors that are driving deals.
As with all real estate trends, it’s never a question of what’s definitively in or out. It’s always a question of where you can achieve the greatest risk-adjusted return.
WHAT DRIVES CAPITAL FLOWS?
Capital flows, both current and historic, are driven by select factors which stand the test of time: geography, market size, and barriers to entry. Geographic proximity plays a crucial role for investors who prioritize physical access to their assets. Cities such as London, Paris, and New York are the top destinations for international capital due to their exceptional accessibility, with short flight durations and connections to global locations.
Beyond this, these markets attract investment by housing headquarters for numerous institutional investors, positioning assets in these locations with advantageous geographic accessibility. This concentration is particularly evident in the US, where approximately 26% of institutional investors maintain their headquarters, creating natural investment corridors based on geographic convenience and established business networks.
Market size stands as a critical factor in real estate investment decisions, with the US commanding approximately 51% of the entire direct transactions market globally since 2020. This dominance extends to individual markets, with New York, Los Angeles, Dallas, Atlanta, and Chicago which rank among the top ten largest investable cities worldwide, often substantially dwarfing other major global markets.
Market scale provides diverse asset selection capabilities and options across property types and risk profiles. Additionally, these established markets offer historical data sets with long-term performance trends which enable better analysis towards informed investment decisions.
From the perspective of business growth and resilience large markets are home to investors, but also some of the world’s largest metro populations, top performing companies, and biggest occupiers, therefore, making these geographies home to some of the world’s most valuable real estate.
Moreover, the US stands as an attractive destination for real estate due to its comparatively low regulatory burden and favorable tax structures.
Despite recent apprehensions surrounding potential trade conflicts and proposed regulations like Section 899—which would have imposed additional tax obligations on foreign investors—the nation has largely maintained its historically welcoming investment climate, and the recent passing of the US’s One Big Beautiful Bill Act is viewed as generally positive for real estate amongst the investor community, including foreign investors.
WHAT DO CURRENT AND HISTORICAL CAPITAL FLOWS TELL US?
Although each investment cycle presents its own nuances, historic capital flows provide a valuable roadmap for understanding how institutional investors evolve and stress an important trend. Institutional investment allocations have maintained remarkable stability across regions for nearly twenty years, with the notable exception of the Global Financial Crisis (GFC) in 2008–2009.
During the GFC, investors temporarily shifted away from US markets and redirected capital to countries like the UK, Germany, France, and Japan, as institutions prioritized domestic assets and overall transaction volumes declined substantially. However, the geographic reallocation in the GFC proved transitory, with regional investment distributions largely pivoting to the US in subsequent years. Since 2010, nearly 40% of direct real estate transactions purchased by institutional investors are assets located in the US.
Digging deeper, the institutional investment landscape has evolved from its once office-dominated allocation strategy to a more diversified strategy across living, industrial, office, retail, hotels, and alternative sectors. Prior to 2009, office investments were 50% of direct real estate transactions by institutional investors globally, a figure that remained above 40% as recently as 2018.
The US is as a critical entry point for institutional investors seeking diversification, particularly in growth and emerging sectors. The US market increased investment in living sectors post-2017 and industrial sectors in 2019—notably before the pandemic-driven industrial boom and move toward living investments was recognized.
Major institutional markets such as the UK, Germany, and Japan lagged these investment trends, in some cases by several years, while the US offered scalable opportunities. More recently the US remains one of the only markets where there is scalable institutional investment into alternatives, like data centers.
Though other markets eventually develop supply and demand to accommodate emerging investment strategies, the US has consistently shown to be a first destination for institutional capital targeting growth sectors.
WHAT IS THE LANDSCAPE FOR INSTITUTIONAL CAPITAL?
The global investor landscape from 2020 through the first half of 2025 shows that when examining country-specific allocations, all institutional investor categories—sovereign wealth funds (SWFs), pension funds, REITs, and investment managers—prioritize the US market above other single country markets.
However, regional preferences demonstrate distinct patterns wherein pension funds and sovereign wealth funds maintain heavier allocations in EMEA and REITs and investment managers show stronger preferences for opportunities in the Americas.
Within the US specifically, living and industrial sectors have attracted predominant focus from institutional investor types during this five-year period, barring sovereign wealth funds which continue to remain underweighted to living.
The significance of institutional capital in US real estate markets cannot be overstated, as these investors have accounted for approximately 36% of total transaction volume over the past five years, securing them substantial influence in driving investment trends and dynamics across the market.
Despite the cyclical nature of real estate and headlines often suggesting radical market shifts, the fundamentals driving institutional investment to the US remain remarkably consistent, even as investment strategies have evolved and diversified across property types.
This consistency reflects the sophisticated approach of institutional investors who draw on their expertise and experience to maintain disciplined investment perspectives amid uncertainty. Rather than reacting impulsively to short-term market fluctuations, institutional investors continue to recognize the US market as a cornerstone of global diversification strategies focused on attractive long-term returns.
MORE FROM SUMMIT #19
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Note from the Editor: Issue #19
Mid-Year Pulse: Global Investors on the Economy, Energy, and Housing
Benjamin van Loon | AFIRE
Bend, Not Break: Investing in Real Estate Amid Economic Uncertainty
John Murray + François Trausch + Russell Gannaway + Kirill Zavodov | PIMCO
Test Of Time: How US Real Estate Withstands an Uncertain Investment Market
Riaz Cassum | JLL
Oh Canada: Why International Investors Might Want a Second Look at Canadian Real Estate Markets
Amy Erixon + Long Tang + Daniel Goldberg + Marie-France Benoit | Avison Young
Beyond Oil: Why Gulf Family Offices Are Doubling Down on US Logistics, Data, and Housing
Abbas Hashmi | Saudi Family Holdings
South of the Border: Higher Yields and Growth in Mexican Industrial
Shaun Libou | Raymond James
Migration Myth: NIMBYism and Why Coastal Movers Aren’t Affecting Sunbelt Housing Supply
Donal Warde | Consultant + Ron Bekkerman | Constellation Data Labs
Machine Center: The AI-Driven Transformation of Data Center Investment
Sam Chandan | Chen Institute for Global Real Estate, NYU Stern School of Business
AI in Commercial Real Estate: A Practical Guide for Industry Leaders
Armel Traore Dit Nignan + Shaarvani Kavula | Principal Real Estate
Artificial Control: Are You Ready for AI Management and Oversight?
Marie-Noelle Brisson + Michael Savoie | CyberReady, LLC
Capitalizing on Dynamics: Demographic Mega-Trends Impacting CRE
Stewart Rubin | New York Life Real Estate Investors
Mid-Cap Assets: An Under-Examined Segment in CRE
Asaf Rosenheim | Profimex
The Lifestyle Renter: A Growing Opportunity for Strategic Investment in High-Quality Apartment Communities
Hannah Waldman | The Dermot Company
The Climate Is Speaking: CRE Underwriting for a Future That’s Listening
Ines Diez + Thomas Stanchak | Stoneweg
+ EDITOR’S NOTE
+ ALL ARTICLES
+ PAST ISSUES
+ LEADERSHIP
+ POLICIES
+ GUIDELINES
+ MEDIA KIT
+ CONTACT
NOTES
—
ABOUT THE AUTHOR
Riaz Cassum is Executive Managing Director and Head of International Capital, Americas for JLL.
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